How Will People with Special Needs Fare Under the GOP Health Care Proposal?

At a recent webinar, members of the Academy of Special Needs Planners (ASNP) discussed the possible impact on people with special needs of legislation crafted by House Republicans to replace Obamacare. Although there is nothing specific in the proposal that mentions those with special needs, the bill – titled the American Health Care Act (AHCA) — could have a significant effect due to the changes it would make to Medicaid.

Near the webinar’s beginning, ASNP co-founder Harry Margolis explained that the AHCA, if adopted in its present form, would likely result in considerably less federal Medicaid money going to the states. Currently, states and the federal government share, more or less equally, whatever it costs to cover a state’s Medicaid beneficiaries, with no limit on the total. The proposed bill would place a cap on how much the federal share would be, with the federal government giving the states a fixed amount per Medicaid beneficiary each year. This amount would rise annually according to an inflation index.

In its analysis of the proposal, the Congressional Budget Office (CBO) projects that this inflation index will fall short of actual costs, meaning that states will have to assume an ever-larger share of their Medicaid bill. As they take on more and more of the Medicaid burden, state officials will have a strong incentive to cut Medicaid benefits or limit enrollment.

ASNP member attorney A. Frank Johns explained one way that a reduction in federal Medicaid resources going to the states could affect children with special needs. All children in public school have a right to free and appropriate education under the Individuals with Disabilities Education Act (IDEA). The Act requires that children with special needs receive individualized educational plans that include therapies and other supports. These supports often extend beyond the school day, and to pay for this after-school assistance states try to get the child on Medicaid so that program will pay for these supports. Johns warned that cuts in federal Medicaid dollars to the states could result in the reduction or loss of these individualized services and therapies for special needs children.

Special needs trusts threatened?

Under the current Medicaid system, the federal government sets out the rules on who may be covered and what services Medicaid will pay for, and each state runs its own Medicaid program within those rules. Advocates for the elderly and people with special needs feared that the Republican health care proposal would do away with the federal rules and create 50 different Medicaid programs in the 50 states. If this were to happen, it would be entirely possible for a state to eliminate the option to create a special needs trust because these trust rules are contained in federal law. This means that funds given to the person with special needs could not be sheltered in order for the individual to continue receiving public benefits like Medicaid. The funds would have to be spent down.

Fortunately, it appears that the AHCA would retain the federal rules, meaning that the option to create a special needs trust would not be lost. However, special needs trusts could be threatened in another way, Johns said. It is anticipated that the Trump administration will be far more open to state requests for “waivers” of the federal rules than was the Obama administration. “Each state,” Johns speculated, “would have a right to seek a waiver to pursue assets within the special needs trust that they may contend are assets that are collectible during the life of the beneficiary. Currently, those assets inside the trusts are not available for reimbursing Medicaid in any way.”

More institutionalization?

The AHCA would also eliminate federal funding for the Community First Choice Option, which helps individuals in nursing homes move to home care. Eight states are taking advantage of the First Choice Option. A loss of federal funds could lead those states to reduce enrollment in the program or eliminate it entirely, resulting in more people with special needs being forced to remain institutionalized rather than moving back home.

The AHCA has encountered resistance even within Republican ranks and it is unclear what the final proposal will include at the end of the legislative process. If you have questions about how to protect yourself or a loved one as the process unfolds, contact your special needs planner.